Risk and Value in Benefit-sharing with Displaced People: Looking Back 40 Years,Anticipating the Future

Abstract

The right to compensation and rehabilitation for those displaced by projects is a generally recognised principle of multilateral development institutions and, increasingly, of national governments. There is no such consensus of the concept of benefit-sharing—neither its definition nor realisation. This paper advances this discussion: reviewing past performance of benefit-sharing and anticipating its future rationale, timing and delivery. Drawing upon country laws and project reviews for hydropower, it also briefly examines prospects for another revenue generating sector: mining and non-revenue generating urban projects. It addresses the question: should benefit-sharing be limited to monetary benefits derived only from projects generating revenue during the project operations phase or should a broader concept of benefit-sharing prevail? The authors compare both financial and resettlement logics of each form. In anticipating an uncertain future, they conclude that centralising partnerships and negotiated consent with the resource losers can lead to workable, durable, ethical and effective benefit-sharing.

Keywords

Benefit-sharing displacement resettlement compensation livelihoods

Introduction

Forty years ago, the World Bank approved an innovative operational policy that addressed the gaps between the national interest for development projects and the interests of people losing out as a result. Benefit-sharing became a distinguishing feature of the World Bank’s resettlement policy approach, through good practice then policy adoption in 1990. Most multilateral development lenders adopted benefit-sharing along with other policy principles.

The developmental approach with benefit-sharing distinguishes international lender policy from, at best, entitlements to simple restitution, or restoration, for what was lost that feature prominently in national property and expropriation law. The case for benefit-sharing, articulated in the late 1970s, rested on resettlement’s high costs to those affected in social, cultural, psychological, gender and economic terms—high costs that justified turning affected people into project beneficiaries with enhanced wellbeing and livelihoods (Scudder, 2018, p. 125). This approach recognised that sustainable livelihoods require longer term support beyond compensation because the disruption experienced sets the affected people behind their non-affected peers in benefitting from development opportunity.

Treated as optional, not mandatory, however, benefit-sharing is not standardised in international lender practice. This paper addresses the definitional uncertainty by presenting and contrasting the cases for two different forms of benefit-sharing. Claims for benefit-sharing abound—but models vary. Examining 13 reservoir cases across the globe, Skinner et al. (2014) found a range of benefit-sharing objectives, mechanisms and governance arrangements, but no certainty that benefits would meet the specific priorities and needs of PAPs directly or that PAPs would have sufficient leverage for effective commercial negotiations on benefit-sharing.

Some countries are forging ahead to establish benefit-sharing mechanisms, particularly for hydropower reservoir projects which exact intensive social costs both in inundated areas and downstream. China, Nepal, India, Brazil and Colombia, for example, have regulated the sharing of revenue or royalties from hydropower projects during project operations. Regulating benefits generates legal certainty and transparency, but might do little for PAPs directly since regulated benefits generally flow to national, provincial or district governments, sometimes for mitigating transborder, downstream costs (Johnson & Cimato, 2018; Hay et al., 2019).

Does this matter? This paper begins by comparing a wider definition of benefit-sharing with a more circumscribed definition and compares the two forms. The paper re-visits the past origins of benefit-sharing, briefly reviews current practices and, in the conclusion, anticipates the future to determine if and how benefit-sharing can best work for PAPs.

Drawing upon rare first-hand project evidence, country laws and other data sources, the authors ask what happens in non-hydropower sectors such as transport and urban development, when projects do not generate any operational phase revenue to share. They review another revenue-generating sector with little benefit-sharing experience—the mining sector. Looking ahead, they ask how certain is it that projects will create and sustain continued value to underwrite benefit-sharing, highlighting the critical importance of project selection and appraisal, and resettlement as a last resort. The final sections propose a way forward for benefit-sharing.

Mainstreaming Benefit-sharing: Reflections on the World Bank Experience

Although both the World Bank Operation Directive, OD 4.30 (1990) and Operational Policy 4.12 (2001) on Involuntary Resettlement recommended project benefit-sharing with PAPs, the use of benefit-sharing increased only negligibly, if at all, in World Bank-assisted projects over the past two decades. This section analyses the impetus for project benefit-sharing, the reasons it has not been mainstreamed and how it could be more effectively promoted.

Author Van Wicklin wrote a chapter on the World Bank experience of benefit-sharing in 1996. Then, benefit-sharing seemed to have a bright future because the literature on it was growing, the World Bank policy promoted it and project examples were proliferating. While the literature continues to grow, the practice—at least among World Bank-assisted projects—has not. This section provides an analysis based on reviews of hundreds of World Bank projects implemented over the past 23 years, complemented by field experience in 24 countries in all six World Bank regions. It describes best practice examples of benefit-sharing but notes there have been many missed opportunities. It offers some reasons why benefit-sharing has not been mainstreamed and makes suggestions for the future. Two examples of non-hydropower projects show benefit-sharing’s potential, illustrating how relatively simple measures can make such a difference to PAPs. It argues for a broader conception of benefit-sharing, concluding with thoughts on overcoming the obstacles to expanded benefit-sharing.

Benefit-sharing was first explicitly mentioned as part of the World Bank’s involuntary policy in Operational Directive OD 4.30: ‘All involuntary resettlement should be conceived and executed as development programs, with resettlers provided sufficient investment resources and opportunities to share in project benefits [underlining in the original]’. The Asian Development Bank (ADB), Inter-American Development Bank and other multilateral development banks (MDBs) adopted similar policy statements. The growing literature in the 1990s was reflected in the World Commission on Dams’ final report (2000), which recommended it, citing numerous references on benefit-sharing (Milewski et al., 1999; Van Wicklin, 1999). The World Bank Involuntary Resettlement Sourcebook (World Bank, 2004) recommended benefit-sharing discussing, for example, ‘Affected People as Shareholders in the Dam Project’. Wang wrote a World Bank guidance note on local benefit-sharing (2012), but only for hydropower projects. There has been no further World Bank guidance on benefit-sharing, even as the literature has continued to grow.

The 1996 desk review of benefit-sharing (published in 1999), identified several dozen World Bank-assisted projects implemented between 1986 and 1996 with benefit-sharing. The chapter identified types of benefit-sharing and sectors that were using benefit-sharing to encourage more widespread adoption—most often project revenue sharing, providing jobs, irrigation, reservoir fisheries, electricity, housing and infrastructure to PAPs. The projects that most frequently used benefit-sharing are those associated with constructed dams and reservoirs, irrigation systems, power plants, coal mines and urban infrastructure. Nonetheless, a wide range of projects were sharing benefits, including projects in transportation, power transmission, environmental protection, agro-processing and other sectors. It seemed that national laws requiring revenue-sharing between projects and PAPs were making the biggest difference in terms of generating benefits for PAPs.

In September 2019, Van Wicklin reviewed all the 2019 resettlement plans on the World Bank website to identify any benefit-sharing. The review revealed that relatively few mentioned benefit-sharing: those that did usually involve giving PAPs priority for employment with the project. Occasionally, irrigation land and housing were shared with PAPs. If anything, there appears to be less benefit-sharing today than was found in the 1996 review.

There are several reasons for this. First, the number of infrastructure projects receiving World Bank lending—the type of project most amenable to benefit-sharing—has greatly decreased in recent years. Second, documents appear even less likely to report on benefit-sharing, perhaps because it is not related to project objectives, is not required and is not a priority. Reports have been streamlined, leaving less space to discuss non-essential topics.

Although benefit-sharing was encouraged, it was never required, monitored or evaluated regularly. The main rationale for benefit-sharing articulated by Cernea (2007, 2008a), Cernea and Mathur (2008) and Van Wicklin (1999) was that it could provide additional financial resources for PAP livelihood rehabilitation. However, resettlement practice focus on meeting policy requirements not on how they are financed. Governments have generally met the financial requirements of World Bank projects in recent years without using benefit-sharing (World Bank, 2014). Therefore, there is a little financial incentive.

Too often, benefit-sharing has been thought of in terms of sharing revenue streams. Few projects generate these, with hydropower projects being the exception. Other rationales for benefit-sharing, such as the ethical argument––those who sacrifice for a project, by giving up land or other assets, should be the first to benefit–– and to encourage PAP support for the project may not have received as much attention but they remain strong arguments. Making PAPs stakeholders in the project can be effective in gaining their support. Private sector organisations have long realised the value of benefit-sharing as part of a broader strategy of community relations and may be a model for MDBs. A broader definition covering a wider set of benefits should be used. PAPs want many kinds of benefits, notably jobs, which they should be offered where possible. PAPs also often want the infrastructure benefits (irrigation, water supply, electricity and so on) the project is constructing. An approach that includes a wider variety of benefits would encourage benefit-sharing in more types of projects.

The first project example provided very substantial benefits to a small number of PAPs. In the World Bank-financed Egypt Helwan South Power Project (2012), the Upper Egypt Power Production Company (UEPPC) offered six permanent jobs (for people aged 18 to 35) per feddan (just over one acre) for the 35 feddan between the proposed power plant and the Nile river. The power company was willing to offer so many jobs because that small piece of land was critical for water intake and discharge pipelines and the cost for that land was a tiny fraction of the total project cost of nearly US$3 billion. Thirty-two households owned or leased this land and they were promised a total of 210 jobs out of the 800 to 1,000 jobs planned for the new power plant. The six jobs for each feddan comprised two labourers, three technicians and one university graduate (such as an electrical engineer, a chemical engineer, community relations specialist and so on.)

Unemployment is very high among the young males of those households although many of them had gained tertiary degrees. Permanent jobs with the power company were so desirable that PAPs gave the jobs to distant family members (nephews, cousins and so on) if they did not have enough household members in the specified age range. A very similar power plant constructed several kilometres away had already created a viable precedent for local employment. In fact, the PAPs given permanent jobs were able to apprentice at the existing power plant while the new one was being constructed. Both the PAPs and the power company were happy with this win-win situation. The power company earned community support and obtained local skilled labour. The deal eliminated the need for worker housing and minimised transport costs. Many PAPs who were previously unemployed or underemployed gained good jobs, which they valued more highly than benefits such as potential revenue sharing.

The second example provided fewer substantial benefits but to a much larger number of PAPs. The ADB-financed China Shaanxi Roads Project (2001) planned to contract goods and services from PAPs to a total value of around US $75 million, about the same amount as the project budget for land acquisition and resettlement. Most of the $75 million were for unskilled construction labour, such as collecting and transporting materials such as gravel and sand that could not be done, or done as cheaply, by machines. PAPs also provided food and lodging in their homes for non-local construction workers. This saved on the costs of constructing worker camps, especially as the workers moved a few kilometres down the road every few weeks as construction progressed. These benefits were short term, but they helped, especially during a time of upheaval for the PAPs.

The $75 million was to be spent on a significant number of the 8,253 people affected—including 6,938 PAPs losing land and 1,315 PAPs with affected housing—as well as on some non-PAPs. Creating so many beneficiaries among the PAPs and other local people was likely to increase community support for the project which was already quite high as the PAPs anticipated the benefits of a nearby expressway. It cut travel time to major metropolitan areas, increased the value of their crops with better marketing prospects and brought other advantages, with PAPs lobbying for more interchanges to increase the benefits. Project contracting of goods and services from PAPs is rarely used for benefit-sharing, but it should be because it is easy to offer. However, not all PAPs will be able—or will want—to take advantage of this benefit.

Benefit-sharing should not be mandatory because it is not suitable for every project nor is it always economically efficient. Nonetheless, exploring the potential for benefit-sharing could be required at the very least and it could be encouraged through guidance or good practice notes that provide examples. MDBs could review private sector experience (for example, the International Finance Corporation [IFC’s] Equator Principles) for lessons. Ultimately, the organisations implementing the projects are the most logical advocates of benefit-sharing. Project design and resettlement planning organisations, university research institutes, capacity-building programmes and others could incorporate benefit-sharing into their training, curriculum and publications to increase awareness of different approaches and methods. Because benefit-sharing takes additional work, specific initiatives to promote it are needed to encourage adoption.

Benefit-sharing in Projects that do not Create Obvious Financial Streams

Some practitioners would refine the definition of benefit-sharing (IFC, 2019; IHA, 2019; Milewski et al., 1999; Wang, 2012). In this definition, benefit-sharing goes beyond ad hoc benefits built into the design of the project, such as access roads, and some employment and procurement (IHA, 2019, p. 11). Although some benefit-sharing can begin during the planning and construction of infrastructure, IHA (2019, p. 23–24) suggests that the permanent and sustainable benefits begin only when the project is operational and generating revenue.

Thus, it is perhaps not surprising that the case for benefit-sharing has been most discussed in relation to hydropower development (for example, IHA, 2019; Skinner et al., 2014). Wang’s (2012) discussion is limited to hydropower, where the sale of electricity generates income for dam sponsors. Extractive resource projects also create income streams by selling minerals. Below, Owen suggests the mining sector has not met its commitment to resettlement with development, much less invested in formal benefit-sharing, despite the fact some mines earn a significant income.

However, many, if not most, of the projects that displace people do not directly generate revenue as such. Two important categories are urban projects and displacement resulting from climate change. Urban infrastructure includes transportation, water and sanitation systems and environmental facilities (Koenig, 2009). Developing cities also wish to regulate the many semi-legal neighbourhoods. Often people are evicted because they have no legal title nor respect for zoning and building regulations. The displaced may get new housing but often their livelihoods are not restored. For example, China’s population changed from being less than 20 per cent urban in 1978 to 59 per cent in 2018. Of an estimated 80 million-plus people displaced and resettled between 1950 and 2015, 44 million were displaced by urban construction and development projects (Shi, 2019).

Urban road and transport projects may generate a public benefit but not necessarily revenue beyond costs. Indeed, they require resources for maintenance. For example, one of the goals of the India Mumbai Urban Transport Project (MUTP) was to improve several major roads. It also cleared the area along the railway tracks, where many people lived. Although the roads are free to all residents, they were not often used by the displaced, most of whom were moved some distance away. Public transport does generate revenue through fares, but it is often insufficient to cover all costs. For example, suburban commuter rail, the busiest part of the Mumbai rail system, covers only operating costs, not capital investments, which are subsidised (Cropper & Bhattacharia, 2012). Public transport systems are often subsidised because they are run less to make a profit than to achieve social and ecological goals, such as providing low-cost transport for poorer residents and reducing carbon emissions and road use.

Climate change has also increased the potential for population displacement. The World Bank (2019) estimates that 143 million people may become climate ‘migrants’ by 2050, while others (Bronen et al., 2018, p. 255) estimate the figure could rise to 250 million. Many such migrants will not be able to benefit from resettlement initiatives and many will decide to move on their own.

People forced to move by climate change and those displaced by development projects face similar issues. Bronen et al. (2018, p. 258) suggest the situation is worse for climate migrants. Development-caused forced displacement begins with financial resources for infrastructure and other interventions, even when it does not generate income over the long-term. This sum now routinely includes funds for at least some compensation and rehabilitation. In contrast, assistance for climate-change-affected people must be found elsewhere. Development banks recognise the importance of this issue for the future. The ADB (2017) now supports climate-resilient development. Even if it proves possible to find some funding, projects that move people out of flood areas or away from improved protective infrastructure rarely produce a revenue stream.

Benefit-sharing without Revenue Streams

These two major categories of displacement show that many of the interventions that displace people do not create income that can be used to fund sustainable or permanent benefit-sharing. The draft new IFC handbook proposal (2019) suggests four major monetary benefit-sharing mechanisms: equity shares for the affected; direct transfer of a fraction of revenues to them; long-term lease of land from landowners; and local property tax levies. Interventions without financial gains cannot use equity shares or a transfer of revenues. The leasing of land from owners may be possible in some cases, but not all. For example, in the MUTP, the people displaced did not usually own the land on which they were living—and this occurs in other urban projects. The use of local property taxes to create a benefit stream for the displaced may be possible in some cases, particularly in urban renewal projects where new, improved lots can be sold to build properties of a higher value. A part of the increased property taxes could be used to create a benefit-sharing scheme. This possibility should be explored when possible.

Nevertheless, benefit-sharing remains most appropriate for projects that generate a viable income over the long-term. Although strategies for benefit-sharing that can be implemented during earlier project phases are valuable, the priority for projects that do not generate long-term revenues would seem to be to pay even more attention to designing and implementing appropriate entitlements at the beginning. Education, healthcare and utilities, essential for PAP quality of life and wellbeing, should be considered a right rather than a benefit. These should be sufficient to enable PAPs to build new livelihoods comparable to those who have not been displaced.

Benefit-Sharing Potential in Mining

Mining needs significant tracts of land and often requires people to ‘make way’ for project activities. The scope for benefit-sharing is vast, as is the range of risks and negative impacts. The language of benefit-sharing has featured only peripherally in discussions about mining-induced displacement and resettlement, no doubt owing to the industry’s own struggle to contain risks. Over the past two decades, displacement and resettlement have emerged as a major industry challenge. ‘Resettlement with development’ or ‘resettlement with benefits’ has eluded the sector. Reflection on the industry’s performance in previous decades finds little connection with the substantive debates that have driven policy changes among international lenders. The sector priority is to exercise its duty of care and to fulfil basic responsibilities to minimise risks to and impacts upon PAPs.

For the mining industry, the principal entry point is the IFC Performance Standard 5 on Involuntary Land Acquisition and Resettlement (2012). It is accessible to companies through national mining associations, the International Council for Mining and Metals and, increasingly, though their interactions with Equator Principles financiers and country-level regulations. These are familiar points of interaction based on concepts that are comfortable for the industry—compliance and risk management. There is, however, little evidence that the industry is operating from enhanced knowledge or capability to avoid or remediate harm (Kemp et al., 2017). No significant improvements in the knowledge base have emerged since Downing’s (2002) seminal paper on resettlement in the mining sector. Governance is universally weak, with few case studies or records of projects and displacement events worldwide.

Looking forward, prospects for improved mining sector performance are difficult to imagine. The inherent complexity described by de Wet (2005) will not change to accommodate the industry’s dwindling appetite for investing in social safeguard capacity. The industry’s volatile response to commodity markets clearly distinguishes mining from other displacing industries, but the translation of this volatility into uncertainty for people on the ground is rarely accounted for. Recent developments at the Porgera gold mine in Papua New Guinea are a case in point where after thirty years of operations, the newly elected Prime Minister has announced his intention not to renew the current operator’s mining license, citing environmental destruction and continuing uncertainty over the resettlement of landowners as key reasons for the decision.

Similarly, the incremental expansion of mining activities during the life of a mine raises unique sector challenges (Owen & Kemp, 2015). Companies carry high levels of financial risk because of significant capital invested in projects, price fluctuations and the long wait for returns to investors. Consequently, mining developers focus on minimising risks to projects rather than risks to PAPs which arise either through mining activities or through the resettlement process itself. For ‘resettlement with benefits’ to have any meaning, it cannot be accompanied by the silent subtext ‘and undisclosed, unmanaged harms’ to PAPs.

The social dimensions of large-scale mining will likely become increasingly challenging. Recent research into the current stock of known, undeveloped copper ore bodies, for example, finds that future projects will need to overcome conditions of far greater complexity than those experienced today (Valenta et al., 2019) through larger footprints, additional energy needs and more mine waste with dangerous elements, such as arsenic (Northey et al., 2017; Schwartz et al., 2017). Host environments will be no less complex. In fact, the location of major undeveloped copper deposits, such as in the Frieda river (Papua New Guinea), Tampakan (Philippines) and Conga (Peru) highlights factors already in play but not well managed by governments or the industry. These include remote sites on tribal, indigenous or customary territory; sites proximate to protected areas with high biodiversity values; and many sites located in ‘fragile states’ (Valenta et al., 2019).

Similar pressures exist for other widely used metals—iron, aluminium, manganese, zinc, lead and nickel—where consumer demand is predicted to double (Lebre et al., 2019). Since existing deposits will not meet future demand, miners will most likely open many of the world’s known undeveloped mineral and metal deposits. Most such sites entail settings that suggest very high levels of a multi-faceted ‘environmental, social and governance’ (ESG) risk, or are what Valenta et al. (2019) have termed ‘complex ore bodies’ for which extraction will be difficult. A simple rise in price will not lead to an improvement in a project’s viability or a reduced ESG risk profile. Social complexities are typically insensitive or resistant to price.

Valenta et al. (2019) analysed future projects, but not how industrial-scale mining projects will impact these settings, exacerbate pre-existing risk conditions or create new forms of risk. Nor did they examine the effect that displacing local populations will have on the surrounding environment, nor the risk profile for people displaced by mining projects. An entire stock of future resource projects exists for which the social complexities and consequences for local people have not yet been calculated.

Future solutions will not come from more favourable commodity prices or new mining technologies. Rather, these complex social conditions will demand an enormous increase in industry capacity to avoid repeating past disasters— often with only short lead times to fill projected shortfalls as for bulk metals like copper. Industry capacity, however—and the surrounding mechanisms for ensuring due process and the application of safeguard principles––is partial, weak or entirely absent. The mining industry’s rhetorical commitment to social performance is rising, but its investment in disciplinary bench-strength is in retreat (Kemp & Owen, 2018).

Benefit-sharing in Large Dams: An Ethical Perspective

In an ethical perspective, benefit-sharing is conceptualised to ensure PAPs benefit equally with other stakeholders in development projects (Bazin et al., 2011, p. vi; Wang, 2012, p. 5). However, the disruption of forced resettlement in practice deprives PAPs of the capacity to share with non-PAPs in project benefits.

Benefit-sharing may be considered in a narrow, exclusively economic sense. Even then, its equitable aspect often is not sufficiently addressed, or effectively achieved in actual practice. All project stakeholders, including PAPs, (such as people benefitting through access to irrigation, hydroelectricity or urban water supply in a reservoir project) cannot be treated ethically and equitably, simply because PAPs are affected whereas others are not (de Wet, 2015, p. 92). So regardless of whether PAPs, as Cernea recommends, (2008b, p. 80), are benefitted ‘with priority’, certain benefits can never be shared because some people must sacrifice the benefits of choice and control to enable others to have those benefits. So no matter how generously PAPs are involved in benefit-sharing from an economic perspective, they can never be set right equitably/fairly because they will never be able to share the benefits of choice and control which they have had to sacrifice to the other project stakeholders. This seems to happen because the primary benefit is usually seen as the development project itself, with the human and natural consequences coming second.

In projects, where neither the benefits nor the costs of development fall equally or equitably across the various stakeholder groups, how is it possible for ‘development’, ‘egalitarianism’ or ‘equity’ to be reconcilable? If a serious attempt is not made to bridge this gap, we will continue to have first- and second-class development beneficiaries.

If development is to bring benefits to all, then benefit-sharing should be equitable and go beyond simply giving PAPs asset replacement or compensation (de Wet, 2009, p. 80). Perceptions of benefit-sharing depend upon perceptions of PAPs in relation to other project stakeholders. This will influence the connection between benefit-sharing and equity (Morgera, 2016, p. 357) and between benefit-sharing and dignity. The notions of sharing and participation—which are now central to the resettlement policy of any international development agency— ‘convey the idea of agency, rather than a passive enjoyment of benefits’ (Morgera, 2016, p. 363). All stakeholders must be treated equally, therefore, not only in terms of fair access to the project’s material benefits but also in terms of access to the other benefits—options, choices and dignity. A development project provides new opportunities for income generation as well as control over project resources (Morgera, 2016, p. 371). These new opportunities must be made genuinely available to all project stakeholders. Not doing so would worsen the PAPs’ negative experience.

African Dam Cases

Haas, in an overview of large dams in West Africa, is pessimistic about the extent to which benefit-sharing has been successful, arguing that there ‘is typically no longer-term recognition of project-affected communities in government development planning’ (Haas 2009, p. 11, p. 29). In a detailed study of six large dams in West Africa, Bazin, Skinner and Koundouno (2011) provide a pessimistic account of their success in achieving benefit-sharing for the affected populations. Electricity generated by the dams either bypasses the locals or their gaining access to it is subject to ‘a set of requirements and high costs’ (Bazin et al., 2011, p. 18). Outsiders rather than local people benefitted from reservoir fishing (Bazin et al., 2011, p. 21, p. 49, p. 101). In cases such as the Selingue Dam in Mali, the projects have created economic benefits for some people (Bazin et al., 2011, p. 50, p. 53). Overall, these dams have provided inadequate compensation or financial benefits for the affected populations. This has resulted from a lack of proper planning, arising from ‘a failure to consult with local stakeholders, [who] are not considered as partners’ (Bazin et al., 2011, p. 18, p. 25).

In the Lesotho Highlands Water Project, South Africa is paying Lesotho royalties for the water it receives and Lesotho is entitled to any project-generated electricity (World Bank 2008, p. 51). The Lesotho government has committed some of these royalties to establish projects in rural Lesotho (World Bank, 2008, p. 61) but not specifically to benefit PAPs. People in the project-affected areas have benefitted from better roads and schools, new houses and some cash income from (temporary) jobs during dam construction (Letsebe 2012, p. 98). However, projects designed for their development have not necessarily been successful (Tsietsi, 2018). These projects have not improved PAPs’ living standards and have been poorly implemented, with budgets not spent and significant levels of corruption (Letsebe, 2012, p. 71, p. 72). While resettled people have received compensation, they have not shared the benefits of the dams.

As of early 2020, conflict and negotiations between Egypt, Sudan and Ethiopia continue unresolved in relation to the timing of the filling of the Grand Ethiopian Renaissance Dam and to the regulation of the subsequent flow of the waters of the Nile downstream of the dam, thereby ‘making it more difficult to reach a benefit-sharing deal’ between the three countries (Tawfik, 2016, p. 574).

In theory, benefit-sharing should leave PAPs better-off than the standard compensation strategies have done. Yet the evidence shows that, often, benefit-sharing activities have not treated PAPs equitably with other development project stakeholders. This raises important ethical implications. If the PAPs do not share project benefits equitably with other stakeholders, it does not seem possible to use benefit-sharing as part of an ethical justification for their forced removal, therefore weakening the entire ethical justification of development-related forced removal (de Wet 2009).

If both compensation and benefit-sharing are problematic, must we look for alternatives to large-scale infrastructure projects, such as large dams? We have decades of documentation of their negative social and ecological consequences. Now, many doubt that large dams pay for themselves economically (Ansar et al., 2014; Moran et al., 2018; Scudder, 2017). While we may not survive without new dams altogether, we need to minimise such large-scale technological exercises. We must develop and use a wide range of new techniques for water harvesting and re-use, for enhancing the performance of existing water supply systems and obtaining renewable energy from our environment. We need to find genuinely participatory, distributive, equitable and non-destructive ways of sharing the benefits of nature with each other in all kinds of economic development.

Benefit-sharing Under Country Frameworks: The Case of India’s 2013 Land Law

India’s new land acquisition policy framework incorporates key lessons from the past and allows space for emerging best practices, such as benefit-sharing. In 2013, India replaced its archaic, colonial-era (1894) land acquisition law with a new law-policy regime of land acquisition. Many hail the flagship Right to Fair Compensation and Transparency in Land Acquisition, Resettlement and Rehabilitation Act (LARRA) 2013 as among the most comprehensive and progressive pieces of national legislation to enshrine the rights of displaced people to fair and transparent land acquisition and the right to livelihood rehabilitation. It came into being through decades of struggle by multiple stakeholders, including socially conscious bureaucrats, social movements, activists, legal reformers, academics, political parties and civil society organisations.

The LARRA 2013 addressed most of the criticisms of the previous land acquisition framework by ensuring that public purpose is strictly defined and no involuntary land acquisition takes place, except in the service of wider societal goals (Kabra & Das, 2019). It counts not just those losing land as PAPs, but also those who lose their primary sources of livelihoods, thereby acknowledging economic displacement. It makes explicit provisions for acquisitions to take place with full transparency and tries to incorporate (albeit to a limited extent) the principle of free, prior, informed consent (FPIC). Several clauses in the Act make special provisions for vulnerable groups, such as women, the disabled, indigenous people and other socially disadvantaged groups.

The LARRA 2013 explicitly requires evidence-backed resettlement and rehabilitation through social impact assessment (SIA) of PAPs so that land-acquiring bodies provide proper compensation and rehabilitation. The LARRA’s SIA clauses are also unprecedented in the history of national land acquisition laws in that they stop land acquisition if the project’s public purpose cannot be demonstrated; and limit land acquisition to the bare minimum, thus enshrining the principle of avoiding or minimising displacement. All these constitute major steps in the direction of ethical development which aims to increase the sum of wellbeing of different sections of society instead of depending on trickle-down principles that are poorly supported by available evidence.

Benefit-sharing Under LARRA 2013

Specific instances of benefit-sharing in the LARRA 2013 provided in Schedule II of the Act include the following:

Landowning families shall receive a minimum of one acre of land in the command area of an irrigation project.

If land is acquired for urban development, 20 per cent of the developed land is to be reserved and offered to landowning project-affected families.

Where the project creates jobs, at least one member of each of the project-affected families is to be offered a job after suitable skill-development training.

Alternatively, in reference to the above, the project-affected family can choose a one-time cash annuity or a monthly annuity for a period of 20 years.

Scheduled Tribes, other forest dwellers and scheduled caste families shall receive fishing rights in the reservoir area of irrigation or hydroelectric projects.

These benefit-sharing arrangements add to strong provisions for paying fair compensation, the creation of adequate housing and public infrastructure at the resettlement site, and a one-time solatium equal to 100 per cent of the compensation amount, resettlement allowance, transport allowance and subsistence grant for each project-affected family.

It is heartening that some country safeguards and laws are beginning to incorporate these lessons and translate them into legislation. The presence of a vibrant democratic structure, with its inherent contestations and negotiations, is essential for such laws to emerge. A vigilant civil society and an independent and well-functioning judiciary are vital for overseeing the actual implementation of progressive legislation like the LARRA 2013 and ensuring that the spirit of fair compensation, transparency, proper rehabilitation and benefit-sharing is upheld in practice.

In implementing LARRA 2013, India’s emerging experience indicates that national and international laws, safeguards and standards help but are not sufficient for ensuring good outcomes for displaced people. The foremost lesson from 40 years of displacement research is that, given its immense human and environmental costs, displacement must never be normalised; it must always be minimised. Non-displacing development options must always be prioritised. Research has also shown emphatically that displaced people bear a disproportionate share of project costs in terms of economic losses, wrenching social transformation and other tangible and intangible impacts that are very difficult to quantify.

Analysis and Conclusions

This conclusion draws together these diverse perspectives by proposing a way forward.

Distinguishing Entitlements from Benefit-sharing

Contributors unanimously agree that benefit-sharing must supplement PAPs’ entitlements to compensation and other assistance to restore their losses and must not be used as a substitute for inadequate, poorly delivered entitlements. Restoration, however, is a problematic concept. Even if fully achieved, which so often it is not, restoration leaves PAPs exposed to crowding-in effects. They fall behind their non-affected peers who have meanwhile benefitted from development opportunities. People displaced by projects, whether physically or economically, should not benefit less due to the disruption of that displacement—an egregious double inequity.

Compensation-only approaches have long been recognised as inadequate. Despite recent brilliant innovations, country frameworks vary significantly. They might neither recognise nor address lost income and livelihood nor PAP well-being (Price, 2019). Consequently, benefit-sharing has been used to channel additional resources to support livelihoods.

Benefit-sharing therefore can be contextual in its conceptualisation: what constitutes a ‘benefit’ in one context may be an entitlement to compensation and other assistance elsewhere. If a project establishes a long-term revenue-sharing fund for resource-losers, is it an entitlement for PAPs’ losses or benefit-sharing with them? Answers depend on a range of factors: the country legal and regulatory framework, the sector, the project type (Price, 2019). PAP evaluation of outcomes is thus essential.

Country frameworks must, at a minimum, guarantee entitlement to restoration and in addition cover lost opportunities arising from the disruption of displacement. Most do not. The case for benefit-sharing on top of that is also clear, to avoid the double disadvantage for PAPs whilst others benefit from development.

What Counts as Benefit-sharing?

This paper considered two options. Option one defined benefits primarily as monetary flows derived from project revenues during operations. This makes financial sense. Revenue-derived benefits are relatively easily tracked and reported, legislated and monitored, compared with the broadly defined benefits. Revenue benefits appear as distinct flows which are less easily confused with entitlements, providing greater certainty to planning and PAP expectations. Revenue streams continuing throughout operations (for example., the life of the dam), can provide PAPs significant long-term growth. This definition, however, excludes from benefits most PAPs on non-revenue generating projects; excludes promising alternatives such as a long-term lease of project land with payments directed to landowners; restricts flexibility on benefit type, timing and prospects for negotiating prior consent; and may not go directly to support PAPs.

Option two defines benefits broadly, including a range of monetary and non-monetary forms giving benefit-sharing greater flexibility. Benefits defined broadly extend to non-revenue generating projects. They can match expressed PAP preferences, for example, for project jobs. In terms of timing, the greatest disruption for PAPs comes with displacement and relocation, mostly before construction, and well before operations—although mining projects more often displace PAPs during the operational phase, raising questions over PAP negotiation leverage, participation and consent. Delaying benefits until operations commence may exacerbate unresolved, displacement-related tensions that began pre-construction leading to project delays and cost increases. Engaging with PAPs from the early stages of the projects allows its sponsors to respond to their preferences; to guard against adverse outcomes such as elite capture of benefits; and to negotiate consent.

Engagement with PAPs also reduces the chance for diffusion of impacts through untargetted area support paid directly to governments, for example, in Brazil’s hydropower regulations (Pulice et al., 2019). In those cases, it is not clear that the supposed ‘benefits’ actually do benefit PAPs (ibid)—raising major questions on the project’s justification. In fact, high-profile legislated revenue benefits supposedly to PAPs may bias project selection towards certain project types, such as reservoirs, despite their intensive displacing and environmental costs. Non-displacing renewable options (for example., solar, wind or river off-take hydropower) may be more cost-effective as well as more socially and environmentally justifiable.

Benefit-Sharing Rationale Shapes its Delivery and Outcomes

The rationale for benefit-sharing may determine how benefits are defined, agreed, timed and shared—choices which shape outcomes for PAPs. Resolving transboundary, downstream issues may direct politically-motivated funds to offset downstream losses—raising questions on both ethics and effectiveness. An economic welfare or equity rationale may focus upon revenue-sharing during the project operations phase. Conversely, a social acceptance rationale may highlight diverse benefits in kind negotiated through outreach to PAPs even before construction commences—to encourage stakeholder support, to address the social dynamics of PAPs and to address their displacement when it occurs. This may include the development of benefit-sharing packages as a condition for FPIC of PAPs, as in the recent Solomon Islands, Tina River hydropower case (Johnson & Cimato, 2018). FPIC must, by definition, precede any project impact on the relevant group. Negotiated agreement on benefit-sharing to secure consent to relocation must be secured before construction commences.

Benefit-sharing Governance

Country frameworks can require benefit-sharing specifically, as in the earlier-mentioned range of countries regulating benefit-sharing from hydropower revenue, and through new legislation such as India’s LARRA. Countries can also support benefit-sharing through the quality and coverage of entitlements for restoration and lost opportunities and through enhanced overall terms for land takings. The overall terms—checks and balances on the public interest; SIA requirements; independent legal oversight for asymmetric negotiated settlements with PAPs; and the accessibility, affordability and independence of appeals and grievance mechanisms—all help determine the transparency and effectiveness of any benefit-sharing mechanism. How well the new Indian law delivers on the promise of minimising involuntary land takings and enhancing PAP livelihoods and living standards will depend upon the actions of central and state government and the outcome of ongoing and new litigation in the courts.

Benefit-sharing must demonstrably succeed in benefiting PAPs, or the project justification is in doubt. This calls for assessment of livelihood and wellbeing outcomes, and PAP levels of satisfaction or otherwise.

Benefit-sharing—An Uncertain Future

Benefit-sharing is relatively untested in planned relocation arising from conflict, disasters and climate change which face uncertain financing sources. Impacts on project revenue streams are uncertain from ‘climate change proofing’ adaptation measures. Climate change itself might undermine the original technical assumptions underpinning project design parameters and their revenue-raising possibilities. For mining, changing patterns of resource use raise doubts about whether difficult new extraction sites will generate sufficient project value to create potential benefits to share. Such marginal projects, arguably, should not proceed unless they can guarantee meeting the costs of full resettlement.

With such uncertainty, sound project selection and appraisal is essential. Displacement must be a last resort. Benefit-sharing used to justify unsustainable or damaging projects risks value creation, project returns and benefits flows—and may share nothing but project risks with PAPs. When both entitlements and benefit-sharing are likely to fail PAPs, projects should not proceed. Uncertainty calls for strong country frameworks with checks and balances to avoid and minimise unjustifiable and unmitigated displacement that put at risk lives and livelihoods.

Effective, Ethical Benefit-sharing

A ‘benefit’ is only a benefit if accepted as such by those receiving it—and this calls for leverage by PAPs taking account of gender and power differentials. Recent examples confirm that absence of meaningful participation opportunities and fair negotiation results in serious disadvantages to PAPs (for example, Zhao et al., 2020’s analysis of a hydropower case). Negotiation of a benefit-sharing package as a consent condition for FPIC may be the best practice for positive PAP outcomes given displacement risks. The negotiation must distinguish clearly between ‘entitlements’ and ‘benefits’ in the specific context.

Benefit-sharing can work well when integrated into governance systems which give PAPs leverage in negotiating fair benefits at an early stage, for example, using independent legal advice. Rigorous project selection is critical to screen out projects which are not economically or socially viable, justifiable, or sustainable, under changing scenarios.

Ethical benefit-sharing is much more than a handout. Rather, it builds upon consent and partnership with those people whose lost assets enable the project to proceed in the first place, giving them agency as investors in creating new opportunities through that project. Conceived as an effective and respectful partnership between project sponsors and displaced people/investors, and subject to binding agreements, benefit-sharing may begin to move towards consent to displacement. Legal instruments must legislate to recognise and protect the outcome for the end user, the PAP, rather than merely the revenue-generating mechanism itself. It is only in partnership with people affected that financial logic may meet resettlement logic in benefit-sharing.

Footnotes

Acknowledgements

The authors would like to thank Dr Mohammad Zaman and Dr David Halmo for their earlier comments.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The authors received no financial support for the research, authorship and/or publication of this article.

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